Appreciated Securities

Charitable income tax deduction for full market value

Avoid capital gains taxes

Gift of appreciated securities

Joan Beal has always been an avid reader. She purchased 100 shares of Amazon.com when it was still a relatively unknown young company. She paid about $20 per share and her $2000 investment is now worth about $75,000. Joan has been supporting the United Way by giving $1,000 per year through payroll deduction, but has decided to increase her gift to $1,500 this year. If she sells two shares at $750 per share, she will end up paying 25% tax on $1,460 in gains, or about $365 tax on about $1100 of capital gain. If she donates two shares of Amazon worth $1,500, she will avoid $365 of capital gains tax and will get a deduction of $1,500 which, in her 40% tax bracket, will save her another $600 in income tax. Her tax savings totals $965 and the after-tax cost of her $1,500 gift is only $535.